Mideast Conflict Causes Global Energy Market Volatility, Ceasefire Stabilizes Prices

Middle Eastern energy markets have experienced volatility amid geopolitical tensions, including the recent 12-day conflict involving Israel, Iran, and the United States. Oil prices surged due to fears of supply disruption, peaking after U.S. bombings of Iranian nuclear sites, but later dropped as Iran refrained from targeting regional oil infrastructure and President Donald Trump suggested loosening sanctions on Iranian crude exports. The conflict also highlighted vulnerabilities in global energy supply chains, particularly the reliance on the Strait of Hormuz and Saudi oil facilities, causing markets to price in future disruption risks despite no immediate supply cuts. Egypt emerged as a significant economic loser due to halted natural gas exports during the conflict, compounded by declining production and rising domestic demand. Despite the conflict's resolution, oil markets remain cautious, influenced by OPEC+ decisions and regional diplomatic developments, with expectations that prices may trend downward if geopolitical stability holds. The Middle East continues to be a critical energy supplier, representing a substantial share of global crude oil and natural gas production, making regional stability crucial for global economic health.